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3M's (MMM) Earnings and Revenues Surpass Estimates in Q1
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3M Company (MMM - Free Report) reported solid first-quarter 2022 results. Its earnings surpassed estimates by 13.73% and sales exceeded the same by 1.02%. This is the company’s ninth consecutive quarter of earnings beat.
Its adjusted earnings in the reported quarter were $2.65 per share, surpassing the Zacks Consensus Estimate of $2.33. The bottom line decreased 4.3% from the year-ago quarter figure of $2.77.
Sales Details
In the quarter under review, 3M’s net sales were $8,829 million, reflecting a decline of 0.3% from the year-ago quarter. The company’s net sales also surpassed the Zacks Consensus Estimate of $8,740 million.
Results suffered from an adverse impact of 2% from movements in foreign currencies, partially offset by a 1.7% year-over-year increase in organic sales.
Region-wise, sales in the Americas increased 2.5% year over year while that in the Asia Pacific was flat. Sales from business in the Europe, Middle East and Africa region declined 7.6% year over year.
The company reports top-line results under four business segments — Safety & Industrial, Transportation & Electronics, Health Care and Consumer. The segmental information is briefly discussed below.
Revenues from Safety and Industrial totaled $3,051 million, decreasing 1.6% year over year. The decline was attributable to a 2.1% negative impact from movements in foreign currencies, partially offset by a 0.5% increase in organic sales.
Revenues from Transportation & Electronics totaled $2,340 million, reflecting a year-over-year decrease of 2.3%. The decline was attributable to a 0.3% decrease in organic sales and a 2% adverse impact from movements in foreign currencies.
Revenues from Health Care were $2,124 million, up 2.7% year over year. The results benefited from a positive impact of 4.7% from organic sales, partially offset by a 2% negative impact from movements in foreign currencies.
Revenues from Consumer increased 1.8% year over year to $1,313 million. Organic sales improved 3.4% but movements in foreign currencies had a negative impact of 1.6%.
In the quarter under review, 3M’s cost of sales increased 6.7% year over year to $4,826 million. It represented 54.7% of net sales compared with 51.1% in the year-ago quarter. Selling, general and administrative expenses increased 4.1% to $1,882 million. It represented 21.3% of net sales compared with 20.4% in the year-ago quarter. Research, development and related expenses decreased 8.4% to $480 million. It represented 5.4% of the quarter’s net sales.
The company’s adjusted operating income in the quarter decreased 17.7% year over year to $1,641 million.
Adjusted operating margin decreased 270 basis points to 21.4%. The adjusted tax rate in the quarter was 17.6% compared with 16.9% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting first-quarter 2022, 3M had cash and cash equivalents of $3,247 million, reflecting a decrease from $4,564 million at the end of the last reported quarter. Long-term debt balance decreased 7.8% sequentially to $14,801 million.
In the reported quarter, the company generated net cash of $1,011 million from its operating activities, reflecting a decrease of 40.1% from the year-ago quarter. Capital used for purchasing property, plant and equipment increased 36.8% to $424 million. Adjusted free cash flow in the quarter was $715 million, down 50.3% from $1,438 million generated in the year-ago quarter. Adjusted free cash flow conversion was 47%.
In the quarter, the company used $852 million for paying out dividends to shareholders and repurchased $773 million worth of treasury shares. It paid out dividends of $858 million and repurchased shares worth $231 million in the year-ago quarter.
Outlook
For 2022, 3M remains focused on investing in emerging end markets to drive long-term growth. Healthy cash flow generation, efforts to strengthen capital structure and sound capital allocation also remain its priorities.
For 2022, it predicts adjusted earnings of $10.75-$11.25 per share, higher than $10.12 in 2021. For the year, organic sales are expected to increase in the range of 2-5% year over year. Free cash flow conversion is expected to be in the range of 90% to 100%.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell).
In the past 60 days, Griffon’s earnings estimates have increased 9% for fiscal 2022 (ending September 2022). The stock has lost 14.5% in the past three months.
Alcoa Corporation (AA - Free Report) presently sports a Zacks Rank #1. Its earnings surprise in the last four quarters was 11.5%, on average.
In the past 60 days, AA’s earnings estimates have increased 76.2% for 2022. The stock has rallied 16.1% in the past three months.
Ferguson plc (FERG - Free Report) presently carries a Zacks Rank of 2 (Buy). FERG delivered a trailing four-quarter earnings surprise of 14.2%, on average.
Earnings estimates of Ferguson have increased 7% for fiscal 2022 (ending July 2022) in the past 60 days. FERG’s shares have declined 14.2% in the past three months.
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3M's (MMM) Earnings and Revenues Surpass Estimates in Q1
3M Company (MMM - Free Report) reported solid first-quarter 2022 results. Its earnings surpassed estimates by 13.73% and sales exceeded the same by 1.02%. This is the company’s ninth consecutive quarter of earnings beat.
Its adjusted earnings in the reported quarter were $2.65 per share, surpassing the Zacks Consensus Estimate of $2.33. The bottom line decreased 4.3% from the year-ago quarter figure of $2.77.
Sales Details
In the quarter under review, 3M’s net sales were $8,829 million, reflecting a decline of 0.3% from the year-ago quarter. The company’s net sales also surpassed the Zacks Consensus Estimate of $8,740 million.
Results suffered from an adverse impact of 2% from movements in foreign currencies, partially offset by a 1.7% year-over-year increase in organic sales.
Region-wise, sales in the Americas increased 2.5% year over year while that in the Asia Pacific was flat. Sales from business in the Europe, Middle East and Africa region declined 7.6% year over year.
The company reports top-line results under four business segments — Safety & Industrial, Transportation & Electronics, Health Care and Consumer. The segmental information is briefly discussed below.
Revenues from Safety and Industrial totaled $3,051 million, decreasing 1.6% year over year. The decline was attributable to a 2.1% negative impact from movements in foreign currencies, partially offset by a 0.5% increase in organic sales.
Revenues from Transportation & Electronics totaled $2,340 million, reflecting a year-over-year decrease of 2.3%. The decline was attributable to a 0.3% decrease in organic sales and a 2% adverse impact from movements in foreign currencies.
Revenues from Health Care were $2,124 million, up 2.7% year over year. The results benefited from a positive impact of 4.7% from organic sales, partially offset by a 2% negative impact from movements in foreign currencies.
Revenues from Consumer increased 1.8% year over year to $1,313 million. Organic sales improved 3.4% but movements in foreign currencies had a negative impact of 1.6%.
3M Company Price, Consensus and EPS Surprise
3M Company price-consensus-eps-surprise-chart | 3M Company Quote
Margin Profile
In the quarter under review, 3M’s cost of sales increased 6.7% year over year to $4,826 million. It represented 54.7% of net sales compared with 51.1% in the year-ago quarter. Selling, general and administrative expenses increased 4.1% to $1,882 million. It represented 21.3% of net sales compared with 20.4% in the year-ago quarter. Research, development and related expenses decreased 8.4% to $480 million. It represented 5.4% of the quarter’s net sales.
The company’s adjusted operating income in the quarter decreased 17.7% year over year to $1,641 million.
Adjusted operating margin decreased 270 basis points to 21.4%. The adjusted tax rate in the quarter was 17.6% compared with 16.9% in the year-ago quarter.
Balance Sheet and Cash Flow
Exiting first-quarter 2022, 3M had cash and cash equivalents of $3,247 million, reflecting a decrease from $4,564 million at the end of the last reported quarter. Long-term debt balance decreased 7.8% sequentially to $14,801 million.
In the reported quarter, the company generated net cash of $1,011 million from its operating activities, reflecting a decrease of 40.1% from the year-ago quarter. Capital used for purchasing property, plant and equipment increased 36.8% to $424 million. Adjusted free cash flow in the quarter was $715 million, down 50.3% from $1,438 million generated in the year-ago quarter. Adjusted free cash flow conversion was 47%.
In the quarter, the company used $852 million for paying out dividends to shareholders and repurchased $773 million worth of treasury shares. It paid out dividends of $858 million and repurchased shares worth $231 million in the year-ago quarter.
Outlook
For 2022, 3M remains focused on investing in emerging end markets to drive long-term growth. Healthy cash flow generation, efforts to strengthen capital structure and sound capital allocation also remain its priorities.
For 2022, it predicts adjusted earnings of $10.75-$11.25 per share, higher than $10.12 in 2021. For the year, organic sales are expected to increase in the range of 2-5% year over year. Free cash flow conversion is expected to be in the range of 90% to 100%.
Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell).
Some better-ranked companies are discussed below.
Griffon Corporation (GFF - Free Report) presently sports a Zacks Rank #1 (Strong Buy). Its earnings surprise in the last four quarters was 56.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, Griffon’s earnings estimates have increased 9% for fiscal 2022 (ending September 2022). The stock has lost 14.5% in the past three months.
Alcoa Corporation (AA - Free Report) presently sports a Zacks Rank #1. Its earnings surprise in the last four quarters was 11.5%, on average.
In the past 60 days, AA’s earnings estimates have increased 76.2% for 2022. The stock has rallied 16.1% in the past three months.
Ferguson plc (FERG - Free Report) presently carries a Zacks Rank of 2 (Buy). FERG delivered a trailing four-quarter earnings surprise of 14.2%, on average.
Earnings estimates of Ferguson have increased 7% for fiscal 2022 (ending July 2022) in the past 60 days. FERG’s shares have declined 14.2% in the past three months.